Seattle Times columnist Danny Westneat–whom you may remember for leaking a draft of the Housing Affordability and Livability Agenda (HALA) committee report in 2014 and then stoking a single-family home preservationist backlash–has struck again, and this time he got smart.

Rather than make his appeal directly about the suffering of single-family homeowners–perhaps less than sympathetic folks since most are sitting on a rapidly appreciating asset already averaging more than $600,000 in value–Westneat focused his latest appeal on low-income renters. Westneat argued recently passed property taxes are hitting apartment landlords hard and forcing them to raise rents.

Nearby I found two drab, mid-50s apartment buildings–one at 525 E. Roy, the other the spiffily named “Cabana Manor” at 712 Summit–that had insane property tax hikes of 57 percent over the past two years. Most every other apartment building I looked at on Capitol Hill, especially the older ones, has seen tax boosts in the 25-percent to 40-percent range.

It’s a perfect storm, with the passage of so many levies by voters combined with escalating building values.

The irony is that while the tax levies are aimed at helping working-class folks–by paying for more subsidized affordable housing, for example–the taxes are hitting the hardest at this older apartment stock, which is Seattle’s last storehouse of naturally affordable housing.

Westneat is straining awful hard to see irony. Irony would be Westneat casting himself as low income renter champion after blocking any changes to the single family home zones covering more than half the city–zones which barely serve low income tenants at all. In our supercharged housing market, the majority of Seattle voters–more than 70% of them–elected to not just renew the housing levy in 2016 but double it. Westneat suggests voters didn’t know what they’re doing and would be unwilling to pay a few dollars more in rent should landlords pass costs along. Knowing the gravity of the affordability crisis, voters choose to invest in more subsidized housing rather than let people like Westneat scare them into inaction with dubious figures and connections.

The various property tax levies pay for a variety of services, including affordable housing, transit, and education. No reasonable person would say stop subsidizing housing, close down public schools, and cut public transit because taxes got too steep. More importantly, these public services are most crucial for the low-income folks whose cause Westneat has suddenly taken up. Wealthy people can afford private school, high-priced Seattle homes, and private vehicles, but low-income folks are pretty much stuck with public schools and more often must rely on public transit and public housing.

The other flaw in the Westneatian worldview is it relies on the goodwill of landlords, a strategy that lasts only as long as either the landlord or the goodwill. And the landlord he built his story around is 79 years old. I’d rather levy for sure thing affordable units than cross our fingers and count on for-profit landlords to rent at below-market rates.

“You don’t think I don’t know I could get more money?” he says when I point out his apartments are easily priced hundreds of dollars per month below one of the hotter markets in the nation.

“My philosophy is if you don’t gouge people, then they’re happy, they stay and it’s less work for me,” he laughed.

But a few weeks ago, Weisenbach, 79 and a retired architect, got a letter from the government that has him questioning how long he can keep up the old-school routine.

Thomas Park Ridge Apartments is across the street from Analog Coffee. (Google Maps)

Weisenbach is referring to yearly burden, not monthly rents. The 20-unit property’s tax bill increasing $15,000 over two years means on average each tenant’s monthly rent would need to increase $62.50 to cover the tax bill–or the landlord could eat the cost. Assuming the landlord does not eat the cost and only increases rents enough to cover the increased tax bill, that $62.50 rent increase over the course of those two years would be considered by most Capitol Hill renters a mild increase relative to what many others experienced. The burden did fall much heavier on the 2017 levy, perhaps leading to a steeper adjustment as Westneat suggested.

But now his 2017 property tax bill alone is higher by about $600 per unit–$50 per unit per month. By itself that’s a 5-percent increase on rent of $1,000. That wasn’t advertised during the political campaigns when they said this tax or that was “only $12 a month for the average homeowner.”

The problem with Westneat’s last assertion is that he’s conflating a specific property tax levy with a larger tax bill from a larger valuation. Weisenbach’s Thomas Park Ridge Apartments assessed improvement value went up $1,320,000 from $3,735,000 in 2016 to $5,155,000 in 2017. (The property’s land valuation remained the same at $900,000.) The increased valuation is what caused Weisenbach’s property taxes to skyrocket, much more so than the Move Seattle Levy–advertised at $12 a month to the average homeowner–or the 2016 Housing Levy–advertised at $10 per month to the average homeowner.

The King County Assessor increased these apartment buildings’ valuations reflecting the skyrocketing value of Capitol Hill apartments. The landlord wasn’t a victim of a specific levy so much as his asset’s increasing value. A strange sob story. But to Weisenbach’s credit, he supports a state or local income tax to lessen the property tax burden. The question is would Westneat?

Doug Trumm is a senior editor at The Urbanist. He joined the exodus to Seattle in 2014, leaving behind his home state of Minnesota. Volunteering with the Minneapolis Bicycle Coalition and serving as an alternate on his local neighborhood association ignited his interest in urbanism. Reading urban planning greats like Jane Jacobs stoked that fledgling fire to an inferno. Living on disputed land between Wallingford and Fremont, he is doing his best to improve both neighborhoods.

catphive

In general I feel like Seattle Times knows they have nominally liberal suburban middle aged audience and really plays to it. That probably is going to do them no favors as the number of baby boomers keeps decreasing.

Mike Carr

No matter how you look at it higher taxes = higher rents. Each rental becomes less affordable with every tax hike implemented already and future tax hikes our Mayor and City Council will propose soon. No need to do your tax math, we are all fully aware of the impacts.

Pablo96

I’ve read his article twice and he’s right: as a property owner, you’re going to pass these costs along to the renter, or, sell the property to a developer who will A): take the rentals off the market and sell them as condos/townhomes or B): Build a new apartment building with much higher rents. Not to mention the additional layers of regulations that have been added to the pile in the Ed Murray administration, rents will continue to climb for the foreseeable future. I’m a single home rental property owner in Seattle and a multi-family property owner in Kent. Which municipality do you think continues to have lower increases in rents due to not sticking it to the small business owner? It’s not the one with all the over-educated pontificators who couldn’t find their way out of a paper bag.

Steve Corley

Until the city allows building of mid-density housing in a lot more areas that are currently single family the rental market won’t appreciably improve. The quick way to add a good number of units is to relax ADU standards. Wait, I’m one of those nominally liberal suburban middle age Seattle Times subscribers mentioned below.

RDPence

I read Doug’s piece expecting to find some flaw in Westneat’s findings — that recent property tax increases are hitting older and relatively affordable apartment buildings very hard. But I didn’t see that, rather only that Westneat should’ve also included higher property evaluations as a major culprit.

The buildings that Westneat cites have already filtered down to affordability for middle-class renters, and there are limits to what landlords can absorb and still keep these older units affordable. I’ve seen no discussion among our elected officials about the impacts of rapidly escalating property taxes, whether caused by price inflation or property taxes. The end result is the same — middle-class middle-income people, especially families, have no future in Seattle. Too poor for market rate housing; too “rich” for subsidized housing. Our future is in the suburbs.

Doug T

Roger, that levies are blamed for higher tax bills rather than higher property valuations is the central error in Westneat’s argument. Blaming levies belies Westneat’s lack of interest in actually helping low income folks. Levies still do more good than harm because we–and especially the most modest income amongst us–need the services they provide. How would Westneat propose preventing property valuations from rising so fast? He never answered that. One promising solution would be allow dense multifamily zoning in more places so Capitol Hill isn’t quite so supercharged of a market. Unfortunately, expanding urban zoning is the opposite of what Westneat supports.

There are bills (SB 5182 and HB 1536) in Olympia that would allow existing stock to get property tax abatement for agreeing to rent a certain % below a certain fraction of AMI. I’m not sure they’ll make it through the senate, but people are working on this issue.

RDPence

The bottom line is still the bottom line. Property tax bills are going up at alarming rates, regardless of the causes, and they are driving up rents in currently-affordable apartment buildings.

I wish I could believe that upzoning SF neighborhoods would be the miraculous “solution” you assert, but I cannot. Tearing down the last of the <$650K houses and replacing them with even more expensive town homes or $2500/month apartments isn't going to lower anybody's property tax bill.

Those bills in Olympia are target at very low income people. They do nothing for the middle class — families too poor for market rate housing and too "rich" for subsidized housing. Their future will still be in the suburbs.

Doug T

I’m not saying there are any silver bullets. But as I laid out even in this nightmare scenario where a rental property’s valuation jumped 38% in one year, rents would would only need to go up $50 per unit to cover the increased tax. Many Capitol Hill renters are seeing worse than that already. It’s unfortunate the landlord’s tax bill went up that abruptly, but most neighboring landlords seem to be raising their rents at least that much whether or not their tax bills jumped that much.

What are we expecting to happen when the kindly landlord sells or dies? Is the next landlord going to continue to rent below market? We can’t pencil these naturally affordable units in as affordable into the future without some sort of intervention.

Donn

Tax levies can do more good than harm – when they address a problem they can really solve. Our fatal weakness seems to be huge levies that no one seriously expects to do more than take a small bite out of the problem – “move on”, ST3, the housing levy, now homeless.

More multifamily zoned parcels would keep his property valuations down? I don’t think so. Did you not write that the improvement valuation went up, but the land valuation remained the same?

Doug T

Exactly. There wouldn’t be so much demand for old units if we were building more new units, both market and rent-restricted. It’s not necessarily that the valuation represents redevelopment value but rather the value of the existing units. Capitol Hill rents have skyrocketed that much that same old units are worth markedly more. This wouldn’t be the case if other options were more prevalent and if more neighborhoods had a Capitol Hill type of appeal. That requires a wealth of restaurant, entertainment, and retail options and great transit. Dense mixed-use zoning can build those type of communities over time.

No reasonable person expects to entirely solve a major problem with one levy, but we do need to take steps in the right direction. It’s fatalistic to say: well this problem isn’t completely solved by this levy so let’s not even try.

Donn

We ARE building more new units. The number that come on line in 2017 expects to be near double the previous record, which I suppose must have been 2016 because you sure see a lot of new buildings around. We didn’t need to rezone any SF to do it.

Sure, go ahead and throw money down those holes, just don’t tell us it’s a good deal for us because they provide services we need.

Doug T

Unfortunately these peak years are happening without inclusionary zoning which would have put more units immediately in the affordable range. It’s great to set a new record, but the demand is even greater, especially for affordable units. Hence, inclusionary zoning makes sense, but to get it pass legal muster in this state in needs to be paired with upzones. Luckily, upzones are the boogeymen they’re made out to be, and if you insist on keeping single family zones sacrosanct, they’re the only way to allow the urban villages to keep growing the city’s housing supply into the future as many areas are built out to present capacity.

You personally may not feel you needed transit upgrades, more affordable housing units, homelessness services, or road safety interventions but the community voted for them and the community will benefit.

Mark

The issue is are we building enough units for all of the people who are moving to Seattle. Yes we are building more units than at any other point in time, however it still hasn’t been enough to this point to satisfy demand.

Zoning more properties for multi family will keep down the prices that builders are paying for properties that can be redeveloped. That in turn would make more projects viable at lower rent levels, and flood the market with more units to keep down or reduce rents. Seattle has the lowest percentage of land zoned for multi-family residential of any major US city.

Donn

We are close to “flooding the market” as we’re going to get, regardless of zoning. Development capital is going to back off, to avoid oversupply; the current surge is projects that got in under the wire to avoid MHA fees. You guys have been fed this “single family” propaganda because it’s convenient misdirection to set you against neighborhood activists, while residential development has proceeded at a gold rush pace.

I don’t know where you guys get this term “inclusionary zoning” – there isn’t any such thing. IZ properly stands for Incentive Zoning. Some writers, like Valdez, use MIZ – Mandatory Incentive Zoning – which emphasizes the rather tenuous notion obscurely alluded to in RCW 36.70A.540 (3) which appears to be the legal foundation from MHA. Inclusionary zoning is a fantasy, as anyone who lives in an LR block in an affluent neighborhood can tell you.

On the IZ issue, there is indeed such a thing called “inclusionary zoning.” We’ve written about it ad nauseum. Not only can I attest to its existence as a professional planner, you can read about it on Wikipedia, pick up a copy of the American Planning Association’s journal, or any number of peer reviewed planning- and affordable housing-related journals.

Incentive zoning is one approach to inclusionary zoning if it provides for affordable housing, but it’s not the only approach. Seattle is pursuing a type of mandatory inclusionary zoning requirement.

When will the type of mandatory inclusionary zoning requirement Seattle is pursuing, be revealed to the public? Surely you’re not talking about MHA! in which low cost housing will be EXcluded from affluent areas and built elsewhere with money from in-lieu fees. It would be more honest to call it what it is, incentive zoning.

As I noted, there are a variety of inclusionary zoning approaches. What you’re getting at is the minutia of how it is implemented. I’m not making an argument for or against the precise location of where affordable housing units should go, but inclusionary zoning as a principle doesn’t dictate that affordable housing has to be constructed in the same building, block, or district—it’s agnostic on that matter. What it does say is that affordable housing should be directed within communities for their general welfare.

Seattle’s MHA framework sets locational considerations for expenditure of in-lieu fees pursuant to SMC 23.58C.040.B.3. Specifically, subsections (b) and (e) address this. The language does allow flexibility in expenditure, but it does establish where fees are derived from as important considerations in doing so.

To say that MHA excludes affordable housing from affluent areas is a reach. I’m not aware of any MHA fees being collected yet (only a few contract rezones have been subject of it) let alone expended. Your accusation is untested.

In any case, you can be specific and call it “incentive zoning,” but that’s just a bucket within “inclusionary zoning.” Or, you could just call it by it’s less technical term: “inclusionary zoning.”

On the contrary, you’re using inclusionary as the technical term – a phrase that a professional planner would understand to have a meaning somewhat apart from its apparent meaning in common English. Though I have to admit, “incentive” is a stretch here too, since MHA is all stick and no carrot.

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